Blackstone Said in Talks to Buy Stake in Goldman’s U.K. Insurer

Aug. 19 (Bloomberg) -- Blackstone Group LP, the world’s
biggest private-equity firm, is in talks to buy a stake in
Goldman Sachs Group Inc.’s European insurance business,
according to a person with direct knowledge of the matter.

The price and size of the stake to be acquired by
Blackstone’s Tactical Opportunities fund are being discussed,
and a deal still may not be reached, said the person, who
requested anonymity because the negotiations are private. The
companies were considering the sale of a minority stake, the
Financial Times reported Aug. 16, citing people familiar with
the matter.

Goldman Sachs, which said it probably will sell a majority
of London-based Rothesay Life Ltd., is doing so in part because
new rules require banks to hold more equity to absorb potential
losses on assets, a person briefed on the discussions said
earlier this month. The business, run by Goldman Sachs partner
Addy Loudiadis, 50, insures more than 10 billion pounds ($15.6
billion) of pension liabilities for companies including IAG SA’s
British Airways.

Christine Anderson, a spokeswoman for New York-based
Blackstone, and Michael DuVally at Goldman Sachs declined to
comment on the potential deal.

The Tactical Opportunities fund, which oversaw $2.7 billion
as of April, invests across Blackstone’s four main strategies:
private equity, real estate, credit and hedge funds. It’s led by
David Blitzer, 43, a senior managing director who started the
firm’s European private-equity business in 2002.

Basel Rules

Rothesay, which Goldman Sachs set up in 2007, had $9.66
billion of assets at the end of the second quarter, an Aug. 8
filing shows. The unit had a pretax operating profit of 266
million pounds in 2012, according to its website.

Goldman Sachs’s Tier 1 common equity was equal to 9.3
percent of the bank’s risk-weighted assets at the end of June
under new rules from the Basel Committee on Banking Supervision
known as Basel III, according to the filing. The New York-based
bank has said it wants to maintain a ratio of about 9.5 percent,
or 1 percentage point higher than regulators will require.

The firm’s Tier 1 common equity was reduced by $9.87
billion because of investments in nonconsolidated financial
institutions, according to the filing. That brought its Basel
III figure to $55.8 billion, compared with $61.9 billion under
current rules.

Insurance Insider reported earlier that Goldman Sachs and
Blackstone were discussing a deal.